Paul Calluzzo
Associate Professor & Toller Family Fellow of Finance
- Adapted from: “Determinants of LGBTQ+ Corporate Policies”
- Based on Research by: Tanja Artiga González, Paul Calluzzo, G. Nathan Dong, and Georg D. Granic
- Journal: Oxford Academic
Key Takeaways
- LGBTQ+ policies are distinct from other corporate social responsibility (CSR) initiatives and are the subject of greater societal controversy
- Younger and more financially resourced firms that cater to retail clientele, with more educated workforces in liberal enclaves tend to have more LGBTQ+-friendly policies
- Shareholders can effectively pressure firms on their LGBTQ+ policies
Millions of people in the United States are impacted by corporate LGBTQ+ policies every day. Corporate social responsibility (CSR) encompasses this significant and, for some, controversial subcategory: LGBTQ+ policies. The impact of CSR initiatives is comparatively far better researched than those specific policies that target LGBTQ+ issues. As firms navigate shifts in societal expectations and the corporate environment, their approach to this particular subcategory of policies represents a distinct and potentially sensitive focus, according to researchers Paul Calluzzo and his co-authors. Previous studies examined other minority groups (gender or racial diversity and inclusion, as examples) and human rights (like child labour). However, unlike these groups, LGBTQ+-related corporate engagements denote a discrete type of initiative because, for certain people, LGBTQ+ equality represents an unacceptable value.
The authors separate policies intended to build relationships with firms' primary stakeholders ("stakeholder management") and policies aimed at social issues unrelated to firms' relationships with primary stakeholders ("social issue participation"). Using the Corporate Equality Index (CEI), created by the Human Rights Campaign, the researchers measured corporate LGBTQ+ policy to establish evidence of factors motivating firms to implement related policies. In their empirical analysis, the group examined the relationship between a firm's general LGBTQ+ policy and its public relations, governance, political ideology, financial health, and employee characteristics. Those predominately young, large, and profitable firms had higher CEI scores. Additionally, firms primarily serving retail customers, which have a highly educated workforce and are situated in liberal political enclaves, also have higher CEI scores.
Data provided by the CEI was precise enough to allow its further categorization to develop firm-level measures of LGBTQ+ stakeholder management (SM) and social issue participation (SIP) policies. Evidence indicated that firm LGBTQ+ SM policy is positively related to the liberal political view and educational status of its local community, consistent with primary stakeholders propelling this policy. Other findings point to highly visible firms being more likely to engage in LGBTQ+ SIP policy, reflecting societal pressure. Significantly, the finding of no relation between LGBTQ+ SIP and poor firm governance suggests that these policies may not harm firms.